Minister of Finance and Economic Development, Mthuli Ncube has reviewed the tax on money transfers which he increased from 5 cents per transaction to 2 percent per transaction on Monday. The minister said that the tax will be capped at a maximum of $10 000 per month. The minister also said that the tax will come into effect when the relevant regulations are gazetted. This marks an about turn from the minister’s position on Monday when he said that the tax was with immediate effect. We publish the Minister’s statement in full below:
At the occasion of the presentation of the 2018 Mid-Term Monetary Policy, I announced a review of the Intermediated Money Transfer Tax from the current 5 cents per transaction to 2 cents per every dollar transacted. Further details pertaining to the tax are as follows:
The 2 Cents per Dollar tax, will apply on transactions of $10 and above only. Transactions below $10 will be exempt from this tax. There is a cap of $10 000 on the amount of tax to be paid. This implies that transfers above $500,000 will attract a flat tax of $10,000.
In addition, the following transactions will be exempt from the proposed tax:-
- Intra-company transfer of Funds including transfer from intermediary accounts;
- Transfer of funds on purchase and sale of equities;
- Transfer of funds on purchase and redemption of money market instruments;
- Transfer of funds for payment of salaries;
- Transfer of funds for payment of taxes;
- Transfer of funds to intermediary accounts, for example, conveyancers;
- Transfer of funds in respect of foreign currency related payments; and • Transfer of funds by Government.
This tax review comes into effect on the date of gazette of the relevant Regulations.